No gain, only pain: With average return of -5.1% this year, war fears could further sink India’s IPO market

Synopsis Indian IPOs are facing tough times this year. Most new listings are not performing well, with many trading below their issue price. This is due to a shaky stock market and global worries. Investors are cautious, preferring to wait for stability. Companies are delaying their IPO plans. The situation could improve when market conditions stabilize and global events become clearer. India's primary market is mirroring the turbulence in the secondary market this year, with most 2026 mainboard IPOs struggling to hold gains amid broader volatility and rising geopolitical risks. Data so far show that of the eight mainboard IPOs listed this year, only three opened in profit on debut, while five listed at a discount. This translates to just 37.5% of stocks listing above their issue price, with the average listing gain at 4.2%. However, the picture weakens by the end of the listing day. Only two stocks managed to close in the green on debut, while six ended in the red. The average end-of-day gain drops sharply to 1%. The underperformance becomes even more visible on a till-date basis. Currently, only three of the eight IPOs remain in profit, while five are trading below their issue price. The average return till date stands at -5.1%, reflecting the pressure on newly listed names in a risk-off environment. The weak primary market backdrop is closely linked to secondary market performance. The Nifty is down nearly 7% so far this year, while mid- and small-cap indices have corrected even more sharply. In such conditions, investor behaviour tends to shift. Khushi Mistry, Research Analyst at Bonanza, says the slowdown is largely sentiment-driven. "Market corrections in broader and mid-cap indices have eroded investor risk appetite. Investors are prioritising averaging down existing holdings over new subscriptions. Muted activity may persist until secondary markets stabilise," she said. Live Events Foreign flows have also added to the strain. Early January saw foreign institutional investors pull out over Rs 7,600 crore amid global uncertainties and rupee weakness. When FIIs turn cautious, liquidity tightens and appetite for new listings typically reduces. Vinit Bolinjkar, Head of Research at Ventura, points to multiple factors. "Corrections in mid- and smallcaps, FII outflows, and post-Budget volatility have all played a role. Companies are delaying launches for better valuations. Reduced exposure to Indian equities by FIIs is further depressing sentiment," he said. Recent listing performance has further dented confidence. When investors see limited gains or post-listing losses, subscription enthusiasm weakens for upcoming issues. Uday Patil, Executive Director at PL Capital Markets, says companies are waiting for better conditions. "Secondary market volatility and valuation concerns have weakened investor appetite. Companies hesitate to launch new IPOs anticipating poor reception. The lull is not structural; it is time-based," he says. Despite the slowdown, the IPO pipeline remains strong, with over Rs 2.5 lakh crore worth of issues awaiting launch. The question is not supply but timing. Adding to the uncertainty is the escalating Iran war, which has emerged as the biggest near-term overhang on markets. Rising crude oil prices, concerns over supply disruptions through the Strait of Hormuz, and the risk of imported inflation have increased volatility across asset classes. For India, higher oil prices translate into pressure on inflation, the rupee, and the fiscal balance, all of which influence equity valuations. If the conflict prolongs and crude sustains at elevated levels, analysts say investor risk appetite could remain subdued, affecting both secondary markets and fresh listings. In such a scenario, IPO pricing may turn conservative, and listing gains could stay muted. However, primary market momentum may revive once volatility eases, earnings visibility improves, and global cues stabilise. Until then, the combination of a weak broader market and geopolitical stress could continue to cap IPO performance in 2026. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel) (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. 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